Linda Artesani shares four ways law firms boost profit: use legal accounting software instead of spreadsheets for trust accounts, build client relationships through onboarding and check-ins, track expenses in QuickBooks or Xero so you get reimbursed, and monitor KPIs like accounts receivable aging and lead conversion.
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Hi there, Linda Artesani, Artesani Accounting and The Proper Trust. This week we're going to dive into my top 4 tips for really running a law firm and keeping it in tip-top shape. So I wanted to share my 4 best tips for keeping your law firm in tip-top shape. Clients often reach out to us and they share some stories how their books have become unruly or really messy. And I think that a lot of times when they come to us, they actually want us to fix the mess. But it's important if you know ahead of time, maybe you will avoid making a big mess of the books because that's really the goal of all these videos and to help you be able to run your firm more efficiently. So my first tip has to be compliance, right? That's the big elephant in the room. Trust account compliance is paramount. And it's probably the most important. That's why I'm making it the number 1 tip. It's also the biggest pain point that attorneys come or call us about. They'll call us and say, I'm so sorry, I've been doing this in, in my, on my own. I've been doing it in a spreadsheet, or I've been doing it in the accounting, and it doesn't balance, and I know it doesn't balance. Or maybe I've got somebody coming in to audit me, and it's just a mess, and I just need some help. So You all know as attorneys the importance of managing the trust matters, the money that's not yours, the retainers. It's in a separate bank account, and you have to know whatever that balance is, what each individual piece is owned by each person that comes to that total. It's so important to make sure that you use the right legal technology to make sure you can manage it. It's really worth the money that you spend on the technology. To have all that in place so that you're not trying to do it in a spreadsheet and band-aiding a problem. Spreadsheets can very quickly become very unruly as you start to grow. So you want to really set that— set yourself up for success right from the beginning, setting up your clients and setting everything up inside of legal technology. And of course, our favorites at our firm are LeanLaw and Clio. The next important tip, I think, for most law firms, that you can get really busy as you start to grow, and you start to let go of client relation— relationship development. And I believe that that's something that can never be neglected. You want every client to feel like they're your only one. And it's so easy as you get busy in our day-to-day work that we forget to manage a really sweet client experience. And it's so paramount for us to gain new clients by having really great communication with our clients and to make sure that they're feeling supported through the whole case or matter. I think that's probably one of the top reasons somebody will leave a bad review is they feel like they were never really paid any attention to, or they didn't get responses. So responsiveness is very, very important. So you wanna make sure that you're tracking this not just in the very end of the matter, a case at your firm, but maybe in the beginning during the onboarding process to see how somebody's feeling as they're being onboarded. Then maybe mid-matter, take some time to maybe survey some of the clients in the middle of the matter to make sure that they're getting, getting the attention they need in the middle. And then of course at the end, that's always important. And then once you've taken all the time to get that data, make sure that you aggregate it and really examine it so you can see where the weaknesses are in your Workflow, maybe certain people, or it could be just the process, and then make those corrections. My third tip is to manage your client expenses to the penny. This is really important. If you go back to the video before this one, you'll see that we talk a little bit about— I talk a little bit about hard costs and soft costs, client costs basically, and how do you manage them? How do you track them? How do you book them in the accounting software? But one missed or 2 missed expenses, these things, if you don't get the money back from the client, then it becomes a firm expense, and that's gonna lower your profitability. So really making sure that you manage them as you're going along. You make sure, like, if you're a PI firm, you wanna make sure you have all those expenses in so that when the matter settles, you get to get your money back for anything that you've had to put out for the client. And that's the one I think is probably most important in a personal injury firm. And of course, if you take the time to set up your accounting in a software like QuickBooks or Xero, make sure that you take the time to analyze the data. The reason you're doing this work— yes, it's to get your taxes done at the end of the year, but really to grow your firm in a profitable way. You want to sit down with a professional And maybe have some time to track some KPIs, some key performance indicators, set some goals, look at what you want to earn in the future, what you'd like to see for expenses and totals. Know your net zero amount that it costs to run your firm. Know the wages that you're paying out for your firm and how much money you're spending there. Just some of the things you really need to track. Know that your accounts receivable is being monitored and collected on, and you don't have a lot of things inside the over 90-day category. I mean, there's so many places— marketing, there's so many places that you can track with KPIs. I've got a ton of articles on KPIs right in the blog if you're interested, and some of them have the formulas there. You can certainly Google them, but for certain, you really want to look at tracking KPIs. Taking that time to look at where you're moving towards, looking at the future and not looking at how— and making sure you look at how you're spending, how you're obtaining clients, what's the lead path. These are just things that are so important, and I think sometimes get missed, especially with the smaller firms. They don't seem to have the time to track all of the expenses and all of the places, and maybe the revenue, things that you just don't think about. And having that seasoned professional that knows your industry is important to be able to help guide you through tracking KPIs and looking at the data and creating a financial strategy for a very profitable law firm. I've got a great blog post that's attached to this video, so make sure you take some time to read the article. And on that note, I hope you all have a wonderful, wonderful week. Bye now.
